The May RE:UK consensus forecasts showed that higher risk-free rates due to the Iran war are expected to hit commercial property capital values in 2026, and all-property total returns for the year have been cut from 8.2% to 5.8%. While we are more optimistic than the consensus on the impact that higher gilt yields will have on property yields, we have also been consistently more pessimistic around the longer-term outlook for property yields. The upshot is that the consensus view on all-property total returns over 2026-30 has now dropped towards our long-held view that returns will come in at just over 7% p.a.
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